LCD-80-23: Published: Dec 5, 1979. Publicly Released: Dec 5, 1979.

Additional Materials:

Contact:

A 1975 GAO report to the Congress recommended ways to improve productivity of Navy aircraft overhaul depots and suggested the possibility of consolidating facilities. The report concluded that excess capacity existed and recommended that the Secretary of the Department of Defense consolidate, eliminate, or place in reserve status, as appropriate, all excess or redundant depot capacity. About 4 years ago, Navy officials said that if organic workload was reduced by 4.5 million direct labor hours, a rework facility would probably need to be closed. The fiscal year 1976 actual organic workload was 25.8 million direct labor hours. The expected fiscal year 1981 organic workload is 19 million direct labor hours or almost 7 million less than fiscal year 1976.

Recent Navy management efficiency studies have shown that both peacetime economies and mobilization responsiveness can be enhanced by operating with less than the current six rework facilities. However, no consolidation decision has been made. The failure to restructure the existing rework facilities has created inefficiencies such as low shop usage. Furthermore, the uncertainty of consolidation efforts may have hindered facilities' modernization, thereby reducing opportunities for increased productivity. The 1975 report also stated that opportunities for productivity gains through economic-lot batch processing are lost because aircraft components are removed and reworked simultaneously with the aircraft. Although the Navy recognized the need to limit concurrent rework, several recent Navy audit reports have indicated that concurrent rework of components continues at some rework facilities.

Recommendation for Executive Action

Status: Closed

Comments: Please call 202/512-6100 for additional information.

Recommendation: The Secretary of Defense should consolidate, eliminate, or place in reserve status, any excess depot capacity that cannot be economically justified to satisfy peacetime and mobilization needs. The Secretary should require the Navy to: establish controls which would keep concurrent component rework to a minimum; take maximum advantage of opportunities to batch process components; and improve the productivity of the rework facilities through added management attention to the work standards and methods program.